Certified Government Financial Manager (CGFM) Practice Exam 2026 - Free CGFM Practice Questions and Study Guide

The excise tax is specifically designed to target certain goods and services, particularly those deemed harmful or undesirable, such as tobacco and alcohol. By imposing higher taxes on these products, the government aims to discourage their consumption, thus influencing consumer behavior for public health purposes. This approach not only generates revenue for the government but also serves as a public policy tool to reduce the negative externalities associated with the consumption of these goods.

In contrast, a value added tax primarily targets the value added at each stage of production and is generally not used to alter consumer behavior. An import tax is levied on goods brought into a country, focusing on trade and economic policy rather than behavior modification. A sales tax applies to general consumer purchases but does not differentiate based on the type of goods being purchased to achieve behavioral goals. Therefore, excise taxes are uniquely positioned to serve the dual purpose of revenue generation and promoting public health by discouraging specific behaviors associated with certain products.